Lenders offered alternatives to repossession

News Category: Industry News

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Buy-to-let mortgage lenders should take constructive action, wherever possible, as an alternative to repossession, according to the Council of Mortgage Lenders (CML).

It comes after third quarter statistics by the CML found that 1.58 per cent of buy-to-let loans were in arrears at the end of September, up from 1.1 per cent at the end of June.

Around two-fifths of buy-to-let mortgage holders will be in negative equity by the middle of 2009, according to Standard and Poor's, but using rental software could help landlords get through the difficult financial climate.

If landlords are struggling to afford their repayments, lenders could appoint receivers of rent as an alternative to repossession, the CML report suggested.

Michael Coogan, director general of the CML, said: "They can make sure that their response to borrowers is constructive and seeks to avoid repossession wherever other solutions can be found."

"That is what lenders are doing," he added, noting that despite the worsening economic crisis, the number of repossessions forecast for 2008 remains at 45,000, the figure predicted by the CML in October last year.

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